SINGAPORE (Reuters) - The front-month Singapore 180-centistoke (cst) high-sulphur fuel oil refining margin hit a record high on Tuesday for the second time this month, boosted by tightening global supply and falling crude oil prices.

FILE PHOTO: An oil pump jack pumps oil in a field near Calgary, Alberta, Canada on July 21, 2014. REUTERS/Todd Korol/File Photo

Lower fuel oil output from refiners in the United Arab Emirates (UAE) and northwest Europe, limited Iranian fuel oil exports due to U.S. sanctions on the nation and steep declines in crude prices have bolstered fuel oil markets, said Matthew Chew, principal oil analyst at IHS Markit in Singapore.

While refinery upgrades and disruptions have crimped global fuel oil supply this year, firm demand could keep margins high in the near-term.

It is rare for fuel oil to trade at a premium to crude oil as it is a byproduct of the crude refining process.

But Asia’s gasoline margin to Brent crude was at just $1.16 a barrel, dragged down by heavy global supplies.

Front-month fuel oil cracks to Dubai and Brent crudes were last at record highs of $3.20 a barrel and $1.56 a barrel respectively on Nov. 7, Refinitiv data showed.

However, as the profits from producing fuel oil remain at elevated levels, refiners may soon begin to boost supply by increasing output of residual fuels.

“As far as December goes, the refining margin for a hydroskimming refinery appears to be almost as good as that of a cracking refinery,” said Sukrit Vijayakar, director of Indian energy consultancy Trifecta.

This gives an incentive for simpler hydroskimming refineries, which typically produce more fuel oil in comparison to more complex cracking refineries, to maximise their processing capacity, said Vijayakar.

“So, I would be hopeful of seeing more supplies of fuel oil in December.”

The record fuel oil margins come ahead of new global standards that will by the start of 2020 limit the sulphur content of marine fuels to 0.5 percent, from 3.5 percent currently, lowering global demand for high-sulphur fuel oil and forcing refiners and shippers to make large investments to comply with the new rules.